File Photo - A view of machinery being used to open up bays along the Mississippi River to the Bonnet Carre spillway is seen through iron gates in Norco, Louisiana May 9, 2011. REUTERS/Sean Gardner
(Copyright Reuters 2016)

These so-called core capital goods orders were previously reported to have dropped 1.3 percent in September. Last month's increase was in line with economists' expectations and suggested that manufacturing was slowly regaining its footing.

The report added to bullish reports on housing starts, home sales, retail sales and the labor market, as well as firming inflation in suggesting that the economy continued to gain speed early in the fourth quarter.

The Atlanta Federal Reserve is forecasting GDP rising at a 3.6 percent annual rate in the fourth quarter. The economy grew at a 2.9 percent pace in the July-September period.

Business spending on equipment has bucked the acceleration in economic growth as the residual effects of a strong dollar and lower oil prices continue to curb profits of some companies.

Business spending on equipment has declined for four straight quarters, weighing heavily on manufacturing, which accounts for 12 percent of the U.S. economy.

With the dollar's rally appearing to have peaked early this year and oil and gas drilling activity rising in recent months, there is cautious optimism that equipment spending will rebound in the fourth quarter.

Capital investment is also expected to pick up as some of the uncertainty surrounding the Nov. 8 presidential election clears.

President-elect Donald Trump has pledged a massive infrastructure spending program, which could spur business investment on capital equipment.

That would boost companies like heavy machinery maker Caterpillar , which last month lowered its full-year revenue outlook for the second time this year.

A 12 percent surge in demand for transportation equipment buoyed overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, which jumped 4.8 percent last month.

That was the biggest rise since October 2015 and followed a 0.4 percent increase in September.

There were also increases in orders for fabricated metal products, electrical equipment, appliances and components, and computers and electronic products.